The prestigious Harvard Club has reached a $4 million settlement with 130 workers following a lawsuit over gratuities never paid to cooks, kitchen and wait staff, NewsCenter 5 has learned.

"While we are confident the Harvard Club did nothing wrong, we could have done things differently," said Harvard Club President Nicholas Iselin in a letter mailed this week to the club's 5,000 members.

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What troubles many members however was the announcement that the board also has voted to sell valuable property next to the club on Commonwealth Avenue, known as the Annex, to help pay for the settlement. Developers are expected to turn the valuable property into condominiums.

The lawsuit centered on language where patrons were charged a 17% surcharge "in lieu of gratuities" but Iselin said workers were told when hired there were no tips at the two Boston clubs, one on Commonwealth Avenue with a second satellite club on Federal Street, since they were being paid $16-$19 an hour.

"Settling the lawsuit was a risk management decision," said Iselin because proceeding to court may have more than triple their liability.

In the same letter, Iselin announced the expected sale of the annex, insisting that the settlement was only one of other reasons for the need of the cash infusion.

He said selling "the Annex was conceived of long before the existence of the lawsuit." Iselin said in the letter the money also will be used to pay off past debts and much needed renovations to the two club facilities.

Workers have been banned from talking about the settlement which still needs court approval, but the president of United Here Local 26 Brian Lang said his members are overjoyed by the agreement and are ready to put this episode behind them and get back to the jobs they really enjoy.

The lawsuit was brought by 3 workers, but 130 who have worked at the two clubs over the last 3 years will share in the settlement. It will be paid out annually over the next 3 years.

In addition to the 17% surcharge issue, the club also distributed money voluntarily given by members to a Holiday Fund to managers as a bonus. $400,000 of the $4 million settlement went towards resolving the Holiday Fund issue.